With chattel mortgage car finance, the car is available for immediate use in the business with no capital outlay. It is utilised for the purchase of cars used to generate income in your business, generally with a minimum finance amount of $10,000. You acquire immediate ownership of the asset. Depreciation and interest are usually tax deductible. No GST payable on individual repayments. You can claim a direct input tax credit (ITC) on the purchase price of the car. The car is taken as security. Fixed interest rates and repayments assist with budgeting for smaller sized businesses and you can spread the repayments over the useful life of the car (normally 8 years) as it generates income.
A chattel mortgage is designed to optimise cash flow while minimising the impact of the GST.
A chattel mortgage can be structured with or without a balloon to suit the business cash flow. While there are no set rules to determine the balloon amount, it can be no more than the estimated saleable value of the car at the end of the term.
Typical balloon values for cars are:
|Term Of Chattel Mortgage||Balloon %|
Lenders will finance up to 100% of the purchase price of the car, however unlike a car lease you may also pay a deposit prior to the commencement of the chattel mortgage car finance agreement.
Comprehensive Car Insurance
Lenders will require comprehensive car insurance; the first years premium can be financed.
Amounts and Terms
GST Impact on Chattel Mortgage
The repayments are not subject to GST, and you can claim the GST up front on the purchase price of the car. All fees and charges are also input taxed.
The interest component and the depreciation attributed to the car can be used as a legitimate business expense. The car is purchased by instalment payments.
Fees and Charges
The following list sets out the most common fees and charges which may be payable by you under a chattel mortgage car finance agreement.
Loan application fee, repayment book fee if payments are not set up via direct debit, early termination fee, vehicle security register fee (VSR), and government stamp duty fees. Lenders will also likely charge for registering the mortgage with ASIC.
Note: An early termination fee separate to break costs may apply, and an interest rebate may also apply given that the total interest amount accrues at the outset.
2 ways to Apply For Car Finance
The fastest way to get an answer for finance is to complete our easy application form online. You even have the ability to attach files from your computer.
The easy way to apply for finance is to request a call back. Leave some details and we’ll call you back to complete the loan application over the phone.